It’s all part of Sue Phillips’ strategy to infuse her one-of-a-kind fragrance shop, Scenterprises Ltd., with an air of exclusivity. And inside the 350-square-foot space, Ms. Phillips reinforces that mystique as she helps patrons discover their olfactory preferences and then blends fragrant drops from assorted small bottles to create scents just for them.

Private one-hour consultations run $350 per person and include a half-ounce bottle of handmade, personal perfume. Refills run $85 for a half-ounce.

August 20, 2013

(NEW YORK) August 20, 2013 – The Luxury Institute surveyed consumers with a household income of $150,000 or more about the appeal and impact of brand partnerships. These wealthy consumers also shared brands that they would be excited to see partner in the future.

Half of all affluent shoppers surveyed agree that the biggest risk for a luxury firm partnering with another brand—luxury or mainstream—is damage to the brand’s image or reputation. Joint advertising, products, events and sponsorships are the most effective types of collaboration.

Among the industries where partnerships are seen as most fruitful are hotels and resorts, travel, fashion and airlines. Women are far more likely than men to applaud fashion partnerships, as well as those involving jewelry and beauty. Men, on the other hand, are most enthusiastic about partnerships involving automobile companies. Affluent shoppers older than 50 are exceptionally interested in airline and cruise collaborations.

Luxury brand collaborations wealthy shoppers would like to see include Michael Kors and Apple, Chanel and Air France, and Lexus and The Ritz-Carlton. Missoni offering its fashions at Target and Vera Wang selling at Kohl’s are two high-profile examples of luxury brands partnering with a non-luxury outfit. Affluent shoppers would like to see additional partnerships of this ilk, including Starwood Hotels and Resorts and Bed Bath & Beyond, Gucci and Coca Cola, among others.

“Brands should partner with companies with similar values and service standards to avoid potential risks of collaboration,” says Luxury Institute CEO Milton Pedraza. “This maintains credibility and helps to ensure a consistently positive customer experience.”

About Luxury Institute (www.LuxuryInstitute.com)
The Luxury Institute is the objective and independent global voice of the high net-worth consumer. The Institute conducts extensive and actionable research with wealthy consumers about their behaviors and attitudes on customer experience best practices. In addition, we work closely with top-tier luxury brands to successfully transform their organizational cultures into more profitable customer-centric enterprises. Our Luxury CRM Culture consulting process leverages our fact-based research and enables luxury brands to dramatically Outbehave as well as Outperform their competition. The Luxury Institute also operates LuxuryBoard.com, a membership-based online research portal, and the Luxury CRM Association, a membership organization dedicated to building customer-centric luxury enterprises.

Shares of Burberry are down more than 18 percent this morning. The luxury retailer slashed profit forecasts and warned that the luxury goods market is headed for hard times.

The main cause, says Milton Pedraza, CEO of the Luxury Institute, is global slowdown. Even while other retailers struggled, luxury retailers were boosted by sales from overseas, especially in Asia.

“China had been the engine of growth for the last several years,” says Pedraza, “[and] it generated a tremendous number of tourists who had been holding up the European luxury market.”

The Chinese slowdown, therefore, has not only affected the luxury market there, but also in Europe.

Luxury retailers could react in a number of ways, says Pedraza, from lowering their prices to reducing their inventory. Most importantly, though, he thinks they will “go after retaining customers who have purchased before,” hoping to increase customer culture and keep previous customers coming back.

French footwear designer Christian Louboutin will begin selling beauty products in late 2013, which could leverage the brand across a mainstream category as long as it does not dilute the name.

Louboutin announced last week that it will partner with Batallure Beauty to create and market Christian Louboutin Beauté products. While some experts say this is a good move to broaden the consumer base, others feel that a beauty line could dilute the brand.

“Christian Louboutin has established a strong brand around a single product line of high-end designer shoe with the immediately-recognizable red sole,” said Karen Kreamer, president of K2 Brand Consulting, Overland Park, KS. ”Extending the brand into beauty products is a good first step before determining how, or if, the brand should be further extended.

(NEW YORK) Apr 16, 2012 — In its latest WealthSurvey, “Age Obsession,” the New York City-based Luxury Institute, in cooperation with skincare brand ReVive, asked U.S. consumers earning at least $150,000 per year about their attitudes on aging and what they’ve done to make them feel younger — from spending money on vitamins and chemical peels to products that restore hair or sexual prowess.

More than half (53%) of wealthy Americans say that the pursuit of better health and a more youthful appearance have prompted them to spend money on some type of anti-aging regimen, which can range from simply maintaining a healthy diet to liposuction.

The tendency to obsess on the effects of aging decreases with age, and is significantly more pronounced in women. Women are more than twice as likely as men (67% vs. 32%) to have engaged in some form of anti-aging routine, either presently or in the past. Gender disparities are also particularly notable when it comes to eating healthy foods (76% vs. 55%), getting adequate sleep (58% vs. 41%) and drinking moderately or not at all (53% vs. 39%).

Memory (59%), eyesight (54%) and weight management (53%) are the top aging-related concerns of both men and women. Women are substantially more likely than men to name wrinkles (59% vs. 21%) or skin elasticity (55% vs. 18%) as top aging-related concerns. Females are also much more likely than men to spend money on upkeep of appearance, such as coloring their hair (58% vs. 9%), using over-the-counter anti-aging products (41% vs. 5%), paying for skin resurfacing therapies (10% vs. 2%), receiving injections like Botox (8% vs. 1%) or undergoing cosmetic surgical procedures such as liposuction or a facelift (4% vs. 1%). Men show more concern than women with hair loss, and 5% of wealthy men have tried grafts, transplants or medication to grow back lost hair, compared to 3% of women.

Most wealthy Americans hold healthy and realistic notions about aging, with 78% saying that a person is “only as old as they feel,” and 71% saying, “age is just a number.” Nonetheless, many feel the pressure to look younger: 58% of respondents identify a youthful appearance as important in achieving professional success, and 68% say that there is more pressure to appear youthful than there was in prior generations. Women are far more likely to feel this pressure than men (81% vs. 54%), but they seem a bit more pleased with their progress in the battle against aging: 72% of women say that they look younger than their age, and 62% of men say they do. Only 12% of both sexes say that they look older than their age.

“The anti-aging market is similar in many ways to luxury retail, because consumers who pay premium prices for better food or membership at an exclusive health club are the same consumers shopping for premium merchandise at places like Nordstrom and Saks,” says Milton Pedraza, CEO of the Luxury Institute. “Companies who market youth to the wealthy have a rich opportunity to tap into a powerful set of demographics and psychographics that never goes away.”

“As a forerunner in the luxury skincare industry, it was significant for ReVive to participate in this survey to garner insight and attitudes on aging, and understand what participants value in their pursuit to look and feel younger,” states Claudia Poccia, CEO and President, Gurwitch Products, L.L.C. “As a brand created by a plastic surgeon, the results of this survey suggest and support the demand for products with the cutting-edge beauty advancements.”

Respondents had a median income of $233,000 per year and a median net worth of $1.3 million.

About Luxury Institute (www.LuxuryInstitute.com)
The Luxury Institute is the objective and independent global voice of the high net-worth consumer. The Institute conducts extensive and actionable research with wealthy consumers about their behaviors and attitudes on customer experience best practices. In addition, we work closely with top-tier luxury brands to successfully transform their organizational cultures into more profitable customer-centric enterprises. Our Luxury CRM Culture consulting process leverages our fact-based research and enables luxury brands to dramatically Outbehave as well as Outperform their competition. The Luxury Institute also operates LuxuryBoard.com, a membership-based online research portal, and the Luxury CRM Association, a membership organization dedicated to building customer-centric luxury enterprises.

May 2, 2011

LVMH has made a significant move into the natural skincare market, acquiring two eco-beauty brands within days. Anne-Louise Fogtmann finds out why

By Anne-Louise Fogtmann
CNBC Magazine
May 2011

Bernard Arnault, chairman of the world’s largest luxury goods group, LVMH, created its environmental affairs department in 1992 – the year Al Gore began writing his first conservation treatise, Earth in the Balance. Back then, however, Louis Vuitton’s geothermally powered warehouses and rainwater-recycling drums were considered the antithesis of the sort of glamour deemed essential to sell pricey frocks. It was not until 2007 that Arnault declared that the French conglomerate’s health depended on it heeding the ethical concerns of its consumers (particularly younger ones) in Western countries. And it would be another two years before LVMH would make a foray into the eco-fashion business, buying a stake believed to be between 40% and 49% in Edun, the ethical clothing group owned by U2′s Bono and Ali Hewson, his wife.

Now LVMH is making what could well be a much bigger leap into the growing eco-beauty market by buying, in the space of several days, the Danish-American botanical skincare brand Ole Henriksen and a 70% stake in cult British label Nude Skincare, co-created by Hewson. LVMH has a strong beauty division – brands such as Benefit, Make Up For Ever and Fresh have each achieved significant growth – but until now, unlike its rivals, the conglomerate had no overt eco-credentials. These latest deals are seen as part of a strategy to continue the acquisition of high- end beauty labels and tap into new markets and distribution channels, especially with Sephora, its aggressively expanding beauty retailer, and DFS (Duty Free Shoppers), the world’s largest luxury travel retailer, in which LVMH is majority owner.

With reported revenues rising 19% and exceeding the €20bn mark for the first time, LVMH had a good 2010. Tellingly, the perfume and cosmetics sector overall recorded revenue growth of 12% and an increase in profit from recurring operations of 14%, in part thanks to the success of Sephora, which showcases more than 200 classic and emerging beauty brands. Launched in France in 1969, and acquired by LVMH in 1997, the retailer today has 1,000 stores across 24 countries. While continuing to gain market share and recording comparable store growth across all regions, last year it increased its presence in Asia and Europe and entered the Latin American market through the acquisition of Brazilian rival Sack’s.

Sephora has become a real gem for the conglomerate, a solid retailer, but also a strong distribution channel for its many beauty brands, which is why LVMH has grown it in recent years through takeovers of local rivals such as Sack’s and Russia’s Ile de Beauté. Indeed, it was the collaboration with Sephora that ultimately led to the takeover of Ole Henriksen, a skincare-and-spa brand founded and owned by its Danish namesake. LVMH managing director Antonio Belloni told CNBC Business: “Ole Henriksen will benefit from working closely with Sephora – our fast-growing, global prestige beauty retailer – to accelerate the brand’s worldwide expansion.”

According to Milton Pedraza, CEO of US research and consulting company The Luxury Institute, the Ole Henriksen acquisition makes a good deal of sense. “LVMH owns Sephora, giving it a window into the brand. It’s a great brand and has equity and profile for the future, such as the spa aspect, hence there is lots of potential to grow the brand, especially in places such as China.” He does have one qualm, however. “Other skincare and make- up brands will worry how Sephora will treat them, so it could cause some concern.” Kline & Co.’s recent Natural Personal Care 2010 survey revealed that natural personal care products had a wholesale global value of $23bn and were growing around 15% a year. Skincare accounted for 41% of this.

Muriel Zingraff, senior adviser at London’s Oak Tree Management, says acquisitions were a way of bulking up a weak segment for Sephora. “LVMH had yet to acquire a natural brand, and these acquisitions were in some ways them playing catch- up. They needed this as their rivals were already active in this market. Clarins had invested in this, Estée Lauder owns Aveda – they are all investing in natural.”

Henriksen – a strong personality with a equally strong product line – had built up a brand that retailed in 22 countries and had in recent years shown impressive growth. But rapid growth requires a brand to expand into new markets and distribution outlets, a daunting task if it does not have the requisite experience or know-how – hence the marriage to LVMH. (Nude, which positions itself as a luxury performance skincare product, also has a strong following and is already a Sephora brand.) must have liked them, because today the retailer is my best retail outlet in the US. I have always been fascinated by the store – it’s a fun, caring and innovative place. We work closely together and that’s why this marriage is so ideal.” Having reached a plateau in terms of expanding the business, he says the most taxing process was trying to cope with red tape. “You need to arrive on the scene with bells and whistles, something which is very difficult to do alone; it is easiest done with LVMH. LVMH allows you to stay alone and retain your DNA, helping take us to the next level.”

He adds that he has no qualms about going back to being a treatment expert and product developer. “The LVMH team will bring muscle and creativity my way, and I am embracing it with open arms. I knew they could not have knocked on the door at a better time. We launched in China last year with Sephora, a big and an important market for us, and doing it with LVMH in the driving seat will be ideal.” DFS Group also has a significant presence in Asia, where it operates DFS Galleria stores, as well as more than 200 outlets at airports in the Asia Pacific region, North America, India and Abu Dhabi.

It’s in LVMH’s interests to keep Henriksen onboard, not least because the larger-than-life skincare developer – whose clients include Elton John, Barbra Streisand, David Bowie, Cher and Mark Wahlberg – has become quite a celebrity himself, using his public appearances to promote his products. “The brand has a good founder with global appeal and a great personality, which is really important,” says Pedraza.

From now on, Henriksen will be the brand’s visionary/creative director and will likely be a key figure when the brand expands into new markets. “Mine is a business of wellness and positivity,” says the effervescent, ever-smiling Dane. “To succeed you must feel confident and create positivity around you, reaching for the moon and the stars. You must have focus, take chances and take a reality check when things go wrong.”

Pierre Mallevays, managing partner at London-based boutique M&A advisory firm Savigny Partners and a former head of M&A for LVMH, says of Sephora: “Over the last decade, the leverage in cosmetics has shifted from the brands to the retailer. Sephora is a fantastic vehicle to not only gauge the success of a brand but also to help speed up its development. This gives LVMH a valuable edge in its acquisition policy in the sector.” Concetta Lanciaux, former advisor to Arnault and now head of consultancy Concetta Lanciaux Advisory, adds that these are Sephora acquisitions more than LVMH ones. “In other words, it is a continuation of Sephora tactics to acquire participations in new concepts and cosmetic brands.”

Sephora US has also entered into an agreement to sell The Body Shop products, a retailing collaboration that is highly uncommon in this business, as since 2006 the stridently green UK company has belonged to French beauty behemoth L’Oréal. The tie-up between Sephora US and The Body Shop, says Pedraza, could be the first of many such alliances. “There are lots of corporate alliances and cross-brand ventures currently cropping up in the luxury market. Companies now understand how distribution and social media affect and change customer behaviour, and they’re aware that they must understand their competitors’ strengths and occasionally they have to tap into those when they are unable to copy them.”

After a sluggish start for its new owner, The Body Shop has been performing well recently for L’Oréal, particularly in Northern Europe and the Middle East, with sales rising 6.2% to reach €172m in the third quarter of 2011, even though like-for-like sales were down 0.6%. The brand is embarking on significant expansion over the next few months in India and Russia. During the third quarter, The Body Shop launched its Rainforest haircare range, the first to feature the brand’s new eco- conscious product symbol.

LVMH’s shopping spree is likely to herald a new wave of acquisitions, according to Zingraff, who points out that L’Oréal, which a few years ago took over the high-end beauty unit YSL Beauté, is also back on the acquisition trail. The world’s largest fragrance company, Coty Inc, was busy too last autumn, picking up beauty company Philosophy from the New York private investment firm Carlyle Group and Dr Scheller Cosmetics from Russia’s OAO Concern Kalina. “It’s similar to the situation in the late 90s and early noughties, when there were a lot of acquisitions of small, quirky brands,” Zingraff concludes. And of course, it’s from small, quirky brands that household names are made.

October 15, 2009

When it comes to beauty, rich women are in la la land—La Mer and La Prairie, that is. According to the Luxury Institute, high net worth women prefer La Mer skin care products and La Prairie makeup.

The Institute’s Luxury Brand Status Index (LBSI) asked high net-worth consumers to rate luxury brands by category across four equally weighted components: Consistently Superior Quality, Uniqueness and Exclusivity, Making the Customer Feel Special Across the Entire Experience and Being Consumed by People Who Are Admired and Respected.

“In today’s new luxury landscape, wealthy consumers will pay skin care and makeup brand premiums only for what they define as genuine luxury,” said Milton Pedraza, CEO of the Luxury Institute. “Skin care and makeup brands must be able to deliver the highest quality products in order to reassure consumers that they’re purchasing value for the associated price. In the current economy, buyers are unforgiving of luxury brands that are not living up to the standard of their brand name.”http://www.happi.com/news/2009/10/12/wealthy_women_like_la_mer_and_la_prairie

October 2, 2009

Luxury Institute Survey: High Net-Worth Consumers Rank “Best of the Best” Luxury Brands in U.S. Skin Care and Makeup Categories

(NEW YORK) October 2, 2009- The Luxury Institute reported today results of the “Best of the

Best” luxury brands in skin care and makeup based on the U.S. 2010 Luxury Brand Status Index (LBSI) survey. The survey identifies the top brands that deliver true luxury based solely on the unbiased ratings of wealthy American consumers, rated in the following categories: Premium Skin Care (27 brands) and Premium Makeup (22 brands).

The LBSI asks high net-worth consumers to rate luxury brands by category across four equally weighted components: Consistently Superior Quality, Uniqueness and Exclusivity, Making the Customer Feel Special Across the Entire Experience and Being Consumed by People Who Are Admired and Respected.

Which luxury providers deliver the best combination of quality, exclusivity, customer experience and peer prestige?

The “Best of the Best” are: (LBSI score out of 10)

Premium Skin Care

o La Mer-7.58

o La Prairie-7.25

o Perricone MD-7.23

Premium Makeup

o La Prairie-7.69

o La Mer-7.59

o Dolce & Gabbana-7.47

“In today’s new luxury landscape, wealthy consumers will pay skin care and makeup brand premiums only for what they define as genuine luxury,” said Milton Pedraza, CEO of the Luxury Institute. “Skin care and makeup brands must be able to deliver the highest quality products in order to reassure consumers that they’re purchasing value for the associated price. In the current economy, buyers are unforgiving of luxury brands that are not living up to the standard of their brand name.”

The proprietary Luxury Brand Status Index (LBSI) survey is the only unbiased measure of the prestige of leading brands among wealthy American consumers. A national sample of 652 wealthy American female consumers, with an average weighted household income of $403,000 and an average household net worth of $2.2 million was surveyed online. The survey data have been weighted with respect to gender, age and income to match the Federal Reserve’s latest Survey of Consumer Finances.

About the Luxury Institute (www.LuxuryInstitute.com)

The Luxury Institute is the uniquely independent and impartial ratings and research and consulting institution that is the trusted and respected voice of the global high net-worth consumer. The Institute provides a portfolio of proprietary publications, research and consulting services that guides and educates high net-worth individuals and the companies that cater to them on leading edge trends, high net-worth consumer rankings and ratings of luxury brands, and best practices. The Luxury Institute also operates the LuxuryBoard.com (www.LuxuryBoard.com), the world’s first global, membership-based online community for luxury goods and services executives, professionals and entrepreneurs.

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February 7, 2009

There’s a drumbeat of bad news on the retail front. Circuit City is closing its doors for good. Detroit can’t pay its customers to buy its cars. Even Wal-Mart is saying its value-loving customers are keeping their wallets closed.

Most shoppers have cut way back. Those who, before the downturn, bought so-called “aspirational” brands–Gucci purses, say–are paring down and making items last longer. But even in tough times, there are some things a girl just won’t give up.

We all want to keep ourselves looking good–for professional and personal reasons. Plus, it’s just fun to indulge, even if it’s in something little like a luscious Chanel lipstick.

“During the Depression, we saw the ‘Lipstick Effect,’” says Northeastern University professor of marketing Nancy Upton of the increase in cosmetic sales, particularly lipstick, despite buyers’ financial hardship. “We see people making economically irrational decisions to lift their mood.”

Because the price point is lower for many women, “cosmetics offer immediate gratification,” explains Upton.

Susan Blond, president of Susan Blond, Inc., an entertainment public relations firm, feels that looking good is essential to her job and keeps her spirits high. Though she’s cut back her beauty regime–giving up pedicures, making fewer trips to the hair salon and “reinventing” old Chanel suits–she still makes the occasional splurge.

“I must confess, I did splurge on a MAC lipstick and gloss at Henri Bendel,” Blond says, “but in my business you have to feel confident and look fabulous.”

As for bigger-ticket items, women are opting for traditional rather than trendy. “Women are not as focused on the ‘it’ bag now,” explains Milton Pedraza, who heads the Luxury Institute, which conducts research on the high-end market. “They’re buying the classics–Akris suits, Birkin bags, Chanel.”

In other words, they’re looking for enduring styles and quality materials, bucking trends and mediocre craftsmanship.

“In this new economy, it’s critical to choose investment pieces wisely,” says Niki Leondakis, COO of Kimpton Hotels & Restaurants. She prefers high-quality bags that “don’t scream a year or season,” like Bottega Veneta, Nancy Gonzalez and Coach. She chooses classically cut jackets and timeless fabrics like cashmere as staples of her wardrobe and pulls together outfits with less expensive accessories.

“I’m still buying luxury brands,” admits Leondakis, “but definitely fewer items and with a newfound discipline to hold out for a sale.”

Leondakis is not alone. Across the country, women from every income bracket are spending less, forcing companies to adapt. The windows of Fifth Avenue stores in Manhattan now display 75% discount signs and many beauty lines are offering more for the dollar.

Frédéric Fekkai unveiled a $30 at-home hair coloring kit (now on sale) a considerable savings from an in-salon color treatment that can run about $400, and skin-care line Terralina provides complimentary home delivery and sales to encourage customers to buy consistently.

While professional women are booking fewer vacations and buying less for their homes, they’re not likely to scale down to inferior beauty brands. “These women say price is not a factor,” says Karen Grant, a vice president at NPD Research and a global beauty expert. “They may buy less and shop less frequently, but they’re not as apt to switch to a lower-priced brand.”

Since looking good on the job is often critical for women, beauty and style items tend to trump other luxuries. Kate Wilkinson, account executive at MS&L Worldwide, now skips Starbucks but can’t give up her bi-weekly mani/pedis.